The latest IT Contractor News from Contract Eye

Most contractor respondents to a PCG poll expect the number of public sector contracts and opportunities to dry up following the recent media campaign against the use of personal service companies.

67% of the 170 contractors questioned felt that it would be harder to secure public sector work following the high profile use of limited companies by high ranking individuals such as Ed Lester, head of the Student Loans Company.

Following on from the Ed Lester revelation, Danny Alexander is expected to report shortly on the extent of limited company use by individuals working for public sector organisations.

Many contracting industry experts have warned that public pressure may force the Government into creating hastily arranged measures to counter the use of limited companies by individuals, despite the fact that the IR35 rules are in place already and are already designed to counter 'disguised employment'.

In Budget 2012, the Government signalled its intentions to consult over implementing further measures to clamp down on the use of PSCs in certain situations. You can read Kate Cottrell's article on a potential crackdown on limited companies in 2013 for more information.

Commenting on the results of the poll, PCG's Managing Director, John Brazier, said that his organisation is "seeking urgent clarification" on the scope of any additional changes to the way limited companies are currently taxed:

"These plans appear ambiguous and may affect senior interims and it is crucial that these legitimate businesses do not suffer as a consequence. Surely we are looking to simplify the tax system so this consultation must sit within the IR35 debate, not supplement it."

Despite the majority opinion, one third of respondents to the poll didn't believe the recent media hype would result in any change to the number of public sector opportunities available to contractors an interims.